Fed, oil and Russia behind Tuesday turmoil

The wild swings that have characterized the U.S. stock market this week come as investors question whether recent events—namely oil's slide to multiyear lows and signs of economic unraveling in Russia—might come into play as the Federal Reserve considers when it will move to normalize U.S. interest rates.

"It's just nuts. Volatility is just about the only way you can put it. There is so much craziness out there, oil prices keep tanking and now you have the whole ruble situation going on," said Randy Frederick, managing director of trading and derivatives with the Schwab Center for Financial Research. He spoke as Russia's central bank tried to stabilize the country's markets in the face of sanctions over Ukraine and falling oil prices.

"Interestingly, it's a geopolitical positive for the U.S. I doubt (Russian President Vladimir) Putin would have gone on the great Ukraine adventure if he thought oil would drop to $60 a barrel," said David Kelly, chief market strategist at JPMorgan Funds.

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Traders work on the floor of the New York Stock Exchange on the morning of November 28, 2014 in New York City.

On Monday, the Dow Jones Industrial Average made triple-digit moves in either direction for the first time in 1½ years. On Tuesday, it did nearly the same, clearing a 99-point deficit to rally as much as 246 points, all within the first two hours of trade.

"We had a good year, people are trying to square positions and people are concerned about what lower oil prices mean," Kelly said of the market's large up-and-down moves.

On Tuesday Russia's currency, down for the past six days, tumbled past 70 to a dollar for the first time.

While crude's drop is helping fuel "all the turmoil in Russia and problems for certain energy producers, what's happened in the last few weeks is good for the United States, Europe and Japan. So far this has been a recovery for the rich in America, and this is for everybody, and is helping spread cheer," Kelly said.

Said Frederick: "When all this stuff settles down, I think things will look OK. In the near term, it's a bit treacherous."

Market strategists are now rethinking expectations that the Federal Open Market Committee would drop its "considerable time" period pledge in regards keeping interest rates low at the end of a two-day meeting Wednesday.

"The question is not so much are they going to drop the wording, but whether what has happened over the last week and a half changed their plans," said Frederick.

"If the U.S. market stabilizes, it's more likely the Fed removes the promise to keep rates low tomorrow. Hopefully the penny has dropped here and people are starting to realize lower oil prices are a positive to the U.S. economy," said Kelly.

"I would hope they are not watching the markets and commodities; they are supposed to watch inflation and employment," said Frederick.